The InsideOut blog is a collection of our strategy, marketing and online thinking.


Marketing in a Downturn
In a strong market it’s easy to relax and coast. Business grows anyway. But markets change, and things are not always so kind. Even so,change can present opportunities. Right now the decisions that businesses make are critical. If a business is managed well during a soft period significant gains can be made relative to the competition.

When things get tough it’s natural for the nerves to kick in. There’s a tendency to retreat and baton down the hatches. Typically businesses may cut back on costs - travel, training, contractors or overtime. More significantly, it can be very tempting to trim marketing investments. Usually these are the wrong steps to take at a time when the focus really needs to be on maintaining or growing the business.

The key thing, going into a tight market, is to pull together a plan to deal with it. By doing this you can take advantage of the situation by acting when others don’t. If you can see what is happening and do something about it, you are going to be far better placed than by drawing the curtains and complaining that the sky is falling.

It’s a truism but it’s important to focus on what you can control and not to worry about what you can’t. You can’t control interest rates, petrol prices, exchange rates, or food prices. However there are many things that can be managed. It’s these things that need to be focused on. So pull a plan together and take control. Here are five areas to focus on;
  1. Existing Customers - It’s always critical to keep the focus on your existing clients. More than ever the focus has to be on the top 20% of customers by sales, which will account for around 80% of your revenue. Spend time with them, find out their pressure points and look for opportunities to proactively assist them. Thank these customers for their loyalty and reinforce the relationship you have with them.
  2. Keep Marketing - Marketing is seen as a discretionary expense, something that can be stopped without business slowing - immediately. However over the years numerous studies have shown that businesses who continue to invest in marketing through a downturn out perform their competition. But this doesn’t mean you should just continue what you’ve always done. Extra attention needs to be paid, to ensure you’re getting the best possible return on the marketing investment made. 
    The key is to use this as an opportunity to re-evaluate everything you’re doing and ensure your marketing activity is generating the best possible value. There are numberous things that can be explored; i. Understand how to use and calculate Marketing ROI to track the value of your marketing. ii. Review all marketing initiatives to ensure the focus is on those with the best chance of the greatest return. iii. Check your major supplier contracts and put these out to market if you’re not convinced about the value the business is receiving. iv. Look at the marketing mix and see if there is a more efficient media mix that will give an improved return. v. Review your results, understand your Marketing ROI and look to make adjustments that will improve the returns.
  1. Margins - don’t be tempted to discount to maintain sales. This is an easy trap to fall into. Instead look to see if there are ways to increase margin to allow more flexibility. Watch out for excess stock and get rid of it to free up cashflow.
  2. General Expenses - Look at all expense lines. A tight market it is a good time to renegotiate with suppliers. Consider getting in some external help to manage the cost evaluation process or hire in a specialist cost reduction business.
  3. New Markets - In a downturn it can be an opportunity to find, understand and develop new market segments. These can provide new pipelines for growth. These could well be current parts of your business that have been neglected in more buoyant times. Be careful to understand what markets will be more susceptible to shrinking and which are more likely to grow. Look to see if you can re-spec your products to serve a more cost conscious market. Consider buying a weaker competitor.
Any change in market conditions brings threats and opportunities. Make sure you’re on your toes and have your eyes and ears open. Be prepared to reevaluate what you are doing and you might be surprised at the improvements that can be found. And last but not least, it’s critical to get your team involved and reward them for assisting in the process. Keep them on side, positive and focused on growing a great company.

For more information about how to use Marketing ROI, read this post or visit our resources section and download our free Marketing ROI whitepaper. We also offer a Marketing Efficiency Programme focused on helping you dramatically improve your marketing results.

InsideOut: Business, Marketing and Online Consultants
Promotion Sales
Date Published: 15/05/2008
The InsideOut blog is a collection of our thinking represented in articles about key business and marketing issues. It's intended to be a source of ideas and inspiration.

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